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U.S. Senate Proposal Aims to Promote LNG as Marine Fuel

Two strong supporters in the U.S. Senate for natural gas use as a transportation fuel and major gas industry executives have joined forces to promote a legislative proposal giving liquefied natural gas (LNG) parity with other fuels, such as diesel, when used in marine transportation on inland U.S. waterways.

Called the Waterway LNG Parity Act of 2015, Sens. Bill Cassidy (R-LA) and Michael Bennet (D-CO) introduced the measure on Thursday with all of the industry organizations lined up in support. It would mean excise taxes levied on LNG used in marine transport would be consistent with its energy output relative to diesel and gasoline.

The current system puts LNG use at a disadvantage in inland waterways, despite being a cleaner and cheaper energy source, the two senators said.

It takes 1.7 gallons of LNG to provide the same amount of energy as a gallon of diesel, so the tax consequences are dramatically different. For a diesel gallon equivalent (DGE) of LNG the tax would be 50 cents, while the charge on diesel would be 29 cents, said Sen. Cassidy.

"By ensuring equal tax treatment for LNG, the proposed law encourages LNG's use and its production -- benefiting Louisiana's economy and workers," he said. Bennet noted that in Colorado natural gas is a growing part of the state's diverse energy industry, and "this bill recognizes the shift to alternative fuels is across transportation technologies."

Just as Congress did earlier this year to provide tax parity for LNG in cars and trucks, the two senators contend that providing LNG parity in marine transportation will allow the fuel "to grow this market and encourages the use of domestically produced natural gas."

The organizations supporting the measure include: NGVAmerica; Clean Energy Fuels Corp.; Energy Connects; Shell Oil Co.;Blu LNG; AGL Resources' storage and fuels unit; Applied LNG, and the West Slope chapter of the Colorado Oil and Gas Association.

On Wednesday, the U.S. Environmental Protection Agency (EPA) said vehicle manufacturers have surpassed more stringent 2014 greenhouse gas (GHG) emissions standards, and the 2014 model year fuel economy remains the highest level ever achieved. The fuel economy results were included in two reports released by EPA.

The GHG Manufacturer Performance Report concluded that for model year 2014, manufacturers are over-complying with the GHG standards by 13 grams of carbon dioxide (CO2)/mile, or about 1.4 miles/gallon (mpg). And a separate report of CO2 emissions and fuel economy trends (1975-2015) showed that fleet-wide model year 2014 fuel economy remained steady at the highest recorded level of 24.3 mpg.

In Texas, applications began being accepted on Wednesday for the state's natural gas vehicle (NGV) grant program aimed at improving air quality, including $37.8 million in emission reduction grants. Sponsored by the Texas Commission on Environmental Quality (TCEQ), grants are available to counties in the Clean Transportation Triangle program targeting nonattainment areas.

TCEQ officials noted that projects eligible for funding include one with at least a 25% reduction in nitrogen oxides (NOx) emissions. NOx forms with sunlight to create ozone. The vehicles in the grant program also must be operated in one or more of the eligible counties at least 75% of the time.

Grant applicants must go through a participating dealer under contract with the TCEQ in order to apply, a commission spokesperson said. A current list of participating dealers and eligible counties is available on the Texas Emissions Reduction Plan website (www.tceq.state.tx.us/airquality/terp).

Elsewhere, American Fueling Systems earlier this month opened a $2 million compressed natural gas (CNG) fueling station in Columbus, GA, the first CNG fueling facility in Columbus and the second largest in the state. The station will fuel fleet vehicles for the City of Columbus and Muscogee County Schools, along with other public and private fleets.

The station has twin 250 hp Cobey compressors with the ability to produce more than 1,150 standard cubic feet (scf) per minute of CNG for use through three dual-hose Kraus dispensers. The facility has more than 60,000 scf of CNG storage capacity.

In California, the use of renewable diesel fuel received a boost as Golden Gate Petroleum won contracts with the state and city of San Francisco for its renewable diesel product, RD99. San Francisco officials have a goal of replacing all the city's diesel vehicles with ones running on RD99. Golden Gate officials said the deal with the state will allow one of the largest public fleets in the nation to convert to renewable diesel.

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